Crude oil prices have risen to above $100 (Sh11,370) per barrel as Russia initiated military operations in Ukraine. Oil prices have hit the triple digits for the first time since September 2014.
Oil prices reach $100, first time since 2014, how was life back then?
Kenya's GDP has increased from 9th to 6th since 2014
Over this seven-and-a-half-year period, Kenya's economy has drastically changed. In what way? Let's have a look.
Kenya, 9th largest economy in Africa
On October 1, 2014 Kenya was classified as a middle-income country after a statistical reassessment of the economy increased the size by 25.3%.
Kenya effectively became Africa's ninth-largest economy, up from 12th, surpassing Ghana, Tunisia, and Ethiopia.
At the time, Kenya became the latest African country to benefit from rebasing its economy after Nigeria overtook South Africa to become the continent’s biggest economy earlier that year.
Leading sectors in the Kenyan economy
As the economy grows and evolves, GDP measures need to be recalculated to account for the new sectors that are emerging hence the rebasing.
However, Nigeria, South Africa, Egypt, Algeria, Angola, Morocco, Libya and oil-producing Sudan still ranked higher than Kenya.
The jump by Kenya's economy into this middle-income status was driven largely by agriculture, manufacturing, and real estate sectors.
Agriculture contributed the most to Kenya's GDP with subsidies going up from 24.1% to 25.4%, based on a five-year average calculated for the period between 2009 and 2013.
The manufacturing sector's contribution to GDP increased from 9.5% to 11.3%, a jump that can be attributed to a focus by the Jubilee administration in it's four-point agenda.
Services sector highlighted as Kenya's best bet
In comparison to 2014, Kenya is currently positioned sixth behind Morocco, Algeria, South Africa, Egypt and Nigeria in a ranking of African countries by GDP.
In 2022, the World Bank projected Kenya's GDP will grow by 4.9%, despite the pandemic shocks to the economy as well as the upcoming August 9 General Election.
According to the 24th edition of the Kenya Economic Update, the rebound will be driven by the services sector as employment conditions and household incomes improve above pre-pandemic levels.
“Kenya is expected to post one of the stronger growth rebounds in the region thanks to diversified sources of growth and sound economic policies and management,” said Keith Hansen, World Bank Country Director for Kenya.
Hansen added: “However, poverty has increased, and the buffers and coping mechanisms of households, firms, and the public finances have been depleted.”
The report notes that the drought conditions affecting some parts of the country is one of the key domestic risk factors already causing severe hardship.
“Should the drought intensify or spread, this would weigh on the near-term economic outlook. Weaker global growth, higher-than-anticipated energy prices, and tighter external financing conditions are the primary external risks.” read the report in part.
#LowerFoodPrices social media protest
In January the overall inflation rate in the country fell slightly for the second straight month – to 5% – but the prices of basic food commodities like maize flour and wheat flour, potatoes, vegetables, and fruits continued rising.
Food inflation for the month of January stood at 9%, meaning many Kenyans struggled to put food on the table.
The Kenya National Bureau of Statistics (KNBS) says for poorer households, where food accounts for about 36% of total spending, the burden is even higher.
Using the hashtag #lowerfoodprices, Kenyans this week criticised the government for failing to stem the rise in the prices of everyday items which they say has made life unbearable.
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